Alphabet is calling on the Government to raise the current Expensive Car Supplement (ECS) threshold for electric vehicles as it warns that the current level hamstring EV take-up.

Caroline Sandall-Mansergh, consultancy and channel development manager at Alphabet GB

Caroline Sandall-Mansergh, consultancy and channel development manager at the business mobility and fleet management services specialist, said the Government was right to introduce ECS for EVs from 1 April 2025, as announced in the 2022 Autumn Statement. But she warned that the existing threshold of £40,000 – the same as for diesel- and petrol-powered cars – could slow down the UK’s move to electric over the next few years.

Sandall-Mansergh said: “I don’t believe the current threshold of £40,000 is at the right level. Based on a review of Alphabet (GB)’s data relating to 3,508 quotable vehicle models, our view is that it should be raised to £60,000.”

Analysis by Alphabet reveals the range of EVs accessible to consumers for under £40,000 is severely limited.

“Our data reveals that the average P11D value of quotable petrol, diesel, hybrid and EV models reviewed is £51,855 – just over 25% more than the current ECS threshold. However, if you look at 961 of quotable EV models, the average list price is £60,273. And for 81% of quotable EVs that are listed over £40,000, the average P11D equates to £66,041 which shows just how much the threshold needs to shift to be truly reflective of the market,” said Sandall-Mansergh.

But she said that raising the ECS threshold from £40,000 to £60,000 should only be a temporary measure, with annual reviews gradually lowering it as more affordable EVs become available.

It’s a call also echoed by the Society of Motor Manufacturers (SMMT) in latest new car registrations data today as it warns that the ‘Expensive Car Supplement’ for EVs is “the wrong measure at the wrong time”.

Alphabet added that the increase to the threshold should be implemented ahead of the Spring Statement in March 2025, and certainly before the 1 April introduction of the Expensive Car Supplement – warning that the change could stop fleets and drivers going electric, hampering emissions reduction and the Government’s green mandate.

Sandall-Mansergh continued: “Any delay to moving the ECS threshold is likely to increase drivers’ hesitancy and potential reticence from making the switch to EV, because including EVs from 1 April will mean increased cost of ownership. There is a genuine concern that drivers will decide to stick with what they know, rather than look favourably at an EV, based on the numbers available to them now.”

She also warned that removal of the ECS exemption for EVs could hamper take-up, not helped by  misinformation and negative mainstream media coverage, as businesses carefully evaluate fleet composition and budget forecasts.

“It’s also a really difficult time because a lot of the EV residual values have gone down,” she added, “so, it’s a ‘double hit’ with RVs worsening and the ECS exemption being removed. This will put a lot of EVs dramatically outside of grade.”

Her advice to fleets is to make sure they are calculating whole-life costs correctly, with all variables included, to ensure they’re getting a true picture. This includes accurate ‘fuel vs energy’ comparison when comparing EVs and ICE vehicles, distinguishing business and personal usage and correctly recording charging costs, whether at-home or for public infrastructure.

Sandall-Mansergh concluded: “Operators should be reviewing the way they construct their car choice list to try to make it as reflective as possible of actual cost. They need to ensure they’re taking a detailed and sophisticated enough view of every element to get accurate results.

“We know they can’t build a car list based on, for example, 25 different averages, but they must have something structured – and now, more than ever, it needs to be accurate.”